Can You Sue a Realtor for Failing to Disclose Property Information?

When purchasing a house, it's crucial to understand the legal obligations and responsibilities of both the realtor and the seller in disclosing important information. Knowing what you can or cannot sue a realtor for can provide clarity and protection during the home buying process.

Legal Obligations of Realtors

Realtors in the U.S. have a legal duty to disclose certain information about a property to buyers. This is especially important if the information pertains to potential hazards or material defects that could impact the possession and use of the house. Here are some examples:

Easements Electrical fires due to non-compliant wiring Flooding Lead hazards

Most realtors are covered by an Errors and Omissions Policy, which acts as insurance to protect them in such situations. However, this policy may not always cover the buyer directly. For instance, if a previous easement was not disclosed and it significantly impacted your property, you may ask your realtor about obtaining coverage under the policy.

Specific Disclosures Required

While a realtor has a general duty to disclose certain information, the specific requirements can vary based on state laws. Here are some key points:

Realtors must disclose negative facts about the property that they are aware of. Unless a state law excuses them, they must disclose material defects or properties that could affect the use or possession of the house. The seller typically has the primary responsibility for disclosure. The realtor can reinforce this through the selling process but is not always expected to uncover hidden issues.

For example, if your realtor did not disclose an easement that significantly restricted your front yard, it’s important to check if the policy would cover this issue. If not, you might have grounds to sue the seller or discuss with a local attorney.

Scope of a Realtor's Duty to Disclose

It’s worth noting that not all information is subject to disclosure. If the realtor is not aware of a specific issue, they are generally not required to disclose it. This can include minor issues like neighbor parties occurring at unusual hours. Nevertheless, a home inspection can help uncover such details and mitigate potential risks.

If the failure to disclose information is due to the previous owner, you might have legal recourse against them. Discussing your specific situation with a local attorney is advisable.

Legal Action and Settlements

Proving that a realtor has knowledge of undisclosed defects and that these defects caused harm can be challenging. However, if you can provide evidence that you were not informed of a defect, you can take legal action. Most realtors prefer to avoid litigation, as they may tarnish their professional reputation. They may choose to settle out of court to avoid such scenarios.

Be cautious when choosing a realtor. Proactively seek out reputable agents with strong reputations and positive references to minimize the risk of undisclosed issues.

If you encounter a situation where a realtor has not disclosed pertinent information, consulting with a local attorney is advisable to navigate the complexities of your specific case.